Challenges Continue Unabated for Current and Aspiring Homeowners

As this year of chaotic politics enters its final quarter, it is clear there is little focus on the state of homeownership or finding solutions to the daunting challenges it faces.To be fair, FHA Commissioner Brian Montgomery has only been on the job a few weeks and we expect, based on his track record, that he will be a strong advocate for fair and responsible homeownership opportunity for aspiring consumers. But he has limited resources at his disposal, and there is little other leadership on this vital issue. While improving employment opportunities and rising wages help more Americans become qualified to buy their own home, these advantages do not yet offset the significant barriers foraspiring homeowners. As we look toward 2019, Your AHAwill maintain and expand our focus on three key issues. As we have discussed before, to drive meaningful changes on any of these issues, there are measures needed at multiple levels of government.

First, credit access remains constrained following the Financial Crisis. The effects of new regulations and policies of Fannie Mae and Freddie Mac (the GSEs) are the major reasons for this. To ease these restrictions while still maintaining high credit quality and sustainable homeownership, alternative credit scoring models need to be approved by the GSEs. These models would provide a credit score for an estimated 30 million consumers who do not today have traditional credit scores. It would allow them to rise into the mainstream of credit access in America and open the possibility of someday qualifying for a mortgage and attaining homeownership. In addition, the loan level pricing adjustments (LLPAs) and guarantee fees (Gfees) that the GSEs charge for backing the performance of mortgage loans that they sell to institutional investors are disproportionally high. Today, these fees are higher than they were in the wake of the Financial Crisis, even though consumer credit quality has substantially improved. Correcting these policies becomes even more crucial as the historically low interest rates of the past decades begin to rise and the shift in aspiring homeowner demographics continues to intensify.

Second, we simply do not have a national housing inventory policy. We need one – desperately! Regulations and policies that continue to constrain available housing inventory require coordinated leadership at the local, state and national levels. These range from “not in my backyard” limits, to layers of costs and time delays associated with obtaining necessary building permits and approvals. In addition, local and state mandates for innovations, such as mandatory solar power, while noble in principle, raise costs and push further away the goal of homeownership for many first time and low/moderate income buyers from a practical perspective, presenting a new hurdle for homebuyers.

Third, costs related to producing a mortgage or building a home have skyrocketed. In addition to the factors mentioned above that are driving home prices higher, due to the costs of compliance, regulations and other industry dynamics, the average cost for a lender to produce a new mortgage has risen to an astounding average of $9,000! This is more than double the average costs from just a few years ago. The National Association of Home Builders (NAHB) has also reported that the regulations and compliance associated with new home construction have added an average of $84,000 to the cost of a new home. This also has a crippling affect making homeownership prohibitive for first time buyers and low/moderate income buyers.

At Your AHA we remain committed to our mission to protect and promote sustainable homeownership for all segments of America. You can do your part by encouraging your friends and family to join America’s Homeowner Alliance at Join AHA here. The more members we attract – the bigger impact we’ll have on producing solutions for you and the housing future of America. Also, ask your candidates running for public office at all levels what policies and solutions they propose to address these major issues impacting homeowners and aspiring homeowners today. Thank you for being part of this growing America’s Homeowner Alliance. Together we are making a difference because your voice is being heard!

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